SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 21, 2000
Movado Group, Inc.
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(Exact name of registrant as specified in its charter)
New York 0-22378 13-2595932
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(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification
incorporation) No.)
125 Chubb Avenue, Lyndhurst, New Jersey 07071
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (201) 460-4800
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ITEM 5. OTHER EVENTS
Movado Group, Inc., on March 21, 2000, announced its preliminary
earnings expectation for the fourth quarter and year ended January 31, 2000.
ITEM 7. EXHIBITS
Exhibit Number Description
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99.1 Press Release, dated May 21, 2000, by Movado
Group, Inc.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Movado Group, Inc.
(Registrant)
Date: March 22, 2000 By: /s/ Kenneth J. Adams
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Name: Kenneth J. Adams
Title: Senior Vice President
and Chief Financial
Officer
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EXHIBIT INDEX
Exhibit Number Description
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99.1 Press Release, dated May 21, 2000, by Movado
Group, Inc.
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Exhibit 99.1
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FOR: Movado Group, Inc.
APPROVED BY: Efraim Grinberg
President
201-460-4800
For Immediate Release CONTACT: Investor Relations:
- --------------------- Stacey Bibi/
Bernadette Garfinkle/
Lindsey Schaefer
Press: Michael McMullan
Morgen-Walke Associates
212-850-5600
MOVADO GROUP, INC. ANNOUNCES PRELIMINARY FINANCIAL RESULTS
Woodcliff Lake, NJ, March 21, 2000 -- Movado Group, Inc. (Nasdaq:MOVA),
today announced preliminary expectations for the fourth quarter and year ended
January 31, 2000. The Company stated that full year earnings are expected to be
below expectations, with a loss reported in the fourth quarter, including an
$8.3 million pre-tax one-time charge in the fourth quarter.
Net sales from ongoing operations for the fourth quarter increased
23.3% to $79.5 million, versus net sales from ongoing operations of $64.5
million in the fourth quarter last year. The fourth quarter sales increase was
driven by strong sell-through of all brands at retail, as well as greater than
anticipated increases in sales of closeout merchandise. In addition, our retail
boutiques generated solid sales increases, with fourth quarter comparable store
sales up 24.0%. At the same time, our outlet stores achieved a 16.8% comparable
store sales increase. Net sales from ongoing operations for the full year
increased 13.4% to $295.8 million, versus net sales from ongoing operations of
$260.9 million for the fiscal year ended January 31, 1999.
The Company expects to report a net loss for the fourth quarter in the
range of $8.7 million to $9.1 million, or $0.67 to $0.71 per share on a diluted
basis. The fourth quarter loss includes one-time charges of $8.3 million
pre-tax, or $0.46 per diluted share after tax, as described below, and was
further impacted by lower than expected gross margins and higher than
anticipated operating expenses. Gross margins for the quarter were negatively
impacted by a greater than expected percentage of sales from closeout inventory.
Operating expenses were higher in the quarter due to increased advertising
expenses, selling expenses and infrastructure investments in excess of plan.
Excluding the one-time charges, the Company expects a net loss for the fourth
quarter in the range of $2.8 million to $3.2 million, or $0.21 to $0.25 per
share on a diluted basis. Last year's fourth quarter net income was $5.4
million, or $0.41 per diluted share.
Net income for the twelve months ended January 31, 2000 is expected to
be in the range of $13.4 million to $13.8 million, or $1.03 to $1.07 per share
on a diluted basis. Excluding one-time charges and the net gain from the sale of
the Piaget distribution business in February 1999, the Company expects a net
profit for the full year to be in the range of $15.6 million to $16.0 million,
or $1.20 to $1.24 per share on a diluted basis. Last year's twelve month net
income was $21.0 million, or $1.58 per diluted share.
During the fourth quarter, the Company recorded one-time charges of
$8.3 million before taxes, or $0.46 per share on a diluted basis after taxes.
These one-time charges (a) reflect a write-down of $5.0 million for non-core
component inventory that will not generate an acceptable return on capital; (b)
provide accruals of $1.0 million relating to asset write downs and lease
termination costs associated with the relocation of our distribution facility;
and (c) relate to
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negative adjustments of $2.3 million to inventory following physical counts
conducted at our fiscal year-end. These inventory adjustments primarily relate
to issues associated with our existing distribution environment and
implementation of a new computer system in early 1999. The Company believes the
new computer system implementation issues are now rectified.
Efraim Grinberg, President of Movado Group stated, "During the fourth
quarter our expenses, particularly advertising support, exceeded our budget.
These expenses along with lower than expected gross margins due to a greater mix
of closeout sales and one-time charges led to a disappointing loss for the
quarter. This performance is clearly unacceptable, and we are committed to
reducing our ratio of operating expenses to sales, despite the investment we
will make to enhance our infrastructure, particularly in support of our growth
objectives. In addition, our gross margins are expected to return to their
normal levels this year, as the amount of closeout sales will represent a lower
percentage of our total sales going forward."
Richard Cote, Executive Vice President of Movado Group stated, "Despite
the disappointing fourth quarter results, the Company's fundamentals remain
strong. The Company has generated record cash flow from operating activities
during the year of approximately $25 million, reduced inventory by approximately
26%, and has $25.0 million in cash and cash equivalents. In addition, the
Company's Stock Repurchase Program resulted in $17.6 million of stock
repurchases in the fiscal year with $8.0 million repurchased in the fourth
quarter. Fiscal year 2001 will be an investment year as we strengthen our
existing infrastructure and build infrastructure to support our future growth,
which will be accelerated by the rollout of our Movado boutiques, the launch of
the Tommy Hilfiger line of watches in Spring 2001, and our international
expansion."
Mr. Grinberg concluded, "Over the past five years, we have demonstrated
an excellent track record of growth. During that time, our sales have increased
over 80% and our net income has more than doubled. While we have faced our first
setback as a public company, we firmly believe we are well positioned to regain
our financial momentum. Our brands continue to maintain their leadership
position, our retail stores are being met by excellent customer response, and we
will continue to implement the proper systems to ensure the future profitability
of our Company."
The Company intends to issue full fourth quarter and full year-end
results during the week of April 10, 2000.
Movado Group, Inc. designs, manufactures, and distributes Movado,
Concord, ESQ and Coach watches worldwide and operates Movado boutiques and
outlet stores in the United States. The Company will launch a line of Tommy
Hilfiger watches in Spring 2001.
This press release contains certain forward-looking statements with respect to
the future performance of Movado Group that involve risks and uncertainties.
Movado's actual results could differ materially from those expressed or
indicated by forward-looking statements. Factors that could cause or contribute
to such differences include, but are not limited to, the Company's ability to
successfully introduce and sell new products, changes in consumer demand for the
Company's products, risks relating to the retail industry, import restrictions,
competition, seasonality and other factors discussed in Movado's filings with
the Securities and Exchange Commission.